Public servants prop up Canberra’s rental returns.
Thanks to government spending and a reliable rental market, Canberra has held its own during the tumultuous economic times. However, as the country recovers its stride and the markets pick up, Canberra will need to perform better if it wants to compete with top performers such as Melbourne.
Canberra recorded an 8.15% year-on-year rise in median house prices to $493,500 according to Residex’s December data. Over the past 10 years, median house values have grown by 10.69%. Units have fared slightly better, notching up an annual growth of 11.15% growth over the past 10 years.
While Canberra managed to ride out the storm over the past 12 months, it had already fallen behind Sydney and Melbourne.
“The problem with Canberra is it doesn’t have much diversity in stock,” says Cameron Kusher of RP Data. “If you look at the cheapest suburb it has a median price of about $360,000 and most suburbs sit in that band of $360,000 to $600,000, unlike Sydney or Melbourne which have more diverse offering.”
According to John Lindeman, head of research at Residex, the city is unlikely to see much growth. “I don’t think there’s any more room for growth [in Canberra],” he says. “In terms of houses, it had a fair bit of growth but I don’t think we’re going to see much more growth in that market – if at all. For inventors looking for return it’s still quite a good investment – for units you’ll get over 5% rent return – but as far as [capital] growth goes, you’re not going to get much.”
Mario Sanfrancesco of LJ Hooker Tuggeranong disagrees. “Unless stock numbers change – in terms of volume of properties for sale – I would be surprised if we don’t have significant growth this year,” he says. “The number of properties available for sale is down and the supply and demand issue comes into play there.”
Sanfrancesco says Canberra is a safe market. “For a top performer, you’d need something significant to happen – something to spur that along and I can’t see one element that’s going to change things this year. But if you’re an investor and you’re risk adverse then it’s a good place to consider. “
